CDFM Budget Formulation and Execution 3 — Questions and Answers
Question 1: In the DoD Planning, Programming, Budgeting, and Execution (PPBE) system, what is the primary output of the Programming phase?
- Budget Estimate Submission (BES)
- Program Objective Memorandum (POM) (Correct answer)
- Defense Planning Guidance (DPG)
- Program Decision Memorandum (PDM)
Correct answer: Program Objective Memorandum (POM)
The primary output of the Programming phase is the POM, which details how each military department proposes to allocate resources across programs over the FYDP.
Question 2: What is the significance of a 'continuing resolution' for DoD budget execution?
- It permanently extends the prior year budget at a fixed percentage
- It allows DoD to obligate funds at a rate generally not exceeding the prior year enacted level (Correct answer)
- It provides supplemental emergency funding above the President's budget request
- It transfers authority from OMB to the service branches to manage their own apportionments
Correct answer: It allows DoD to obligate funds at a rate generally not exceeding the prior year enacted level
A continuing resolution (CR) allows agencies to continue operations when a new appropriation is not enacted, generally limiting obligations to the prior year's rate.
Question 3: Which type of reprogramming action requires prior approval notification to congressional defense committees before execution?
- Below-threshold reprogramming
- Prior approval reprogramming (Correct answer)
- Internal reprogramming
- Emergency reprogramming
Correct answer: Prior approval reprogramming
Prior approval reprogramming requires formal congressional notification and a waiting period before DoD can execute the fund shift.
Question 4: Under DoD financial management policy, what is an 'obligation'?
- A payment made to a vendor for goods or services received
- A definite commitment that creates a legal liability to pay (Correct answer)
- An administrative reservation of funds before a commitment is made
- A congressional authorization to spend funds in a future year
Correct answer: A definite commitment that creates a legal liability to pay
An obligation is a definite commitment that creates a legal liability of the government to make a payment when the conditions of the contract or agreement are met.
Question 5: What is the primary difference between 'authorization' and 'appropriation' in the federal budget process?
- Authorization provides legal authority for programs while appropriation provides the actual funds to operate them (Correct answer)
- Authorization is issued by OMB while appropriation is issued by the President
- Authorization is multi-year while appropriation must always be annual
- Authorization sets spending ceilings while appropriation establishes spending floors
Correct answer: Authorization provides legal authority for programs while appropriation provides the actual funds to operate them
Authorization legislation establishes, continues, or modifies a program or agency, while appropriations legislation provides the actual budget authority to incur obligations.
Question 6: In DoD budget execution, what is the purpose of an Expenditure Transfer Account (ETA)?
- To transfer budget authority between defense agencies
- To record appropriation disbursements and receipts in Treasury accounts (Correct answer)
- To temporarily hold funds pending congressional reprogramming approval
- To consolidate multiple appropriation accounts for reporting purposes
Correct answer: To record appropriation disbursements and receipts in Treasury accounts
ETAs are Treasury accounts used to record the disbursement of appropriated funds and the collection of reimbursements during budget execution.
Question 7: What does the '80/20 rule' refer to in the context of DoD O&M fund management?
- 80% of funds must be obligated in the first 80% of the fiscal year
- Seventy-five-day rule that prohibits obligating O&M funds in the last 20% of a fiscal year for long-lead items
- Services must spend at least 80% of O&M funds in the year appropriated (Correct answer)
- Contracts using O&M funds must be completed within 80% of the period of performance
Correct answer: Services must spend at least 80% of O&M funds in the year appropriated
DoD policy generally requires that at least 80% of O&M funds be obligated within the year of appropriation to ensure funds are used for their intended purpose.
CDFM Budget Formulation and Execution 3
In the DoD Planning, Programming, Budgeting, and Execution (PPBE) system, what is the primary output of the Programming phase?